8 Steps Towards Successful Renovation
Cherie Barber, Director of Renovating for Profit talks about renovation in a scientific light. In an article for the Property Observer, Jennifer Duke illustrates the 8-point approach of Barber.
- Renovation measures should depend on the strategy of purchase. For instance, is it a case of “buy and hold” (with renovation used as an intermediary goal) or “buy and sell” (wherein renovation is used to raise the sale value)?
- Barber also believes in reading a suburb carefully. She proposes the case of middle ring and inner city to highlight her point. Whereas the middle ring is held well by cosmetic renovations, the inner city is best served by structural renovations. You have got that just right Barber.
- Renovate after comparing renovation figures in the neighbourhood. It gives you a rough estimate about where to tread and which renovations to typically avoid.
- Check with the Council in regards to any not-so-easy-to-figure-out defect with a property. You miss out on this aspect of Due Diligence and there you go- nothing short of harassment on a later day.
- Acquire the property at below-market rates. If you already buy at crest, renovations will fall upon you as a burden you can neither shake off nor swallow.
- Go through the council approvals twice or thrice.
- Be true to time and never let the communication channels (between you and the renovating firm) sap.
- Pick your property managers and buyers’ agent with care.
You can read the original article here.
Barber’s approach, as she herself points out, is not arty but centred around making money for the investors. It really has scientific leanings. I agree with most of what Duke has mentioned.
Investors overcapitalise at times
In my opinion, investors make one more mistake. They often overcapitalise while renovating. It is worth noting that expensive fixtures do not necessarily raise the value of your home.
Prefigure the rental yield in the neighbourhood
Such fittings and fixtures will only present a case of wasteful spending if the rental yield is low for your neighbourhood.
‘Successful renovation’ formula
Speaking through perspective I have gathered from Case Studies and personal experience, I can say that the cost of successful renovation should not exceed the difference between property value before and after renovation.
To present as a formula:
(Property value after renovation- property value before renovation)> cost of renovation
Of course, here the cost of reno must include the cost of permits, council approvals, and surveys undertaken.
Have you given due regard to council approvals in the past?
